Net giving still trails pre-recession levels

Nonprofits in the U.S. did a better job in 2010 acquiring and keeping donors but continued to lose money because they still lost donors and secured gifts that were smaller than in 2009, a new report says.

So net giving in 2010 still trailed its levels from before the recession but improved significantly from 2009, says the 2011 Fundraising Effectiveness Survey Report, an initiative of the Association of Fundraising Professionals and the Center on Nonprofits and Philanthropy at the Urban Institute.

For every $5.35 they gained in new dollars in 2010 from new, current and previously-lapsed donors, nonprofits lost $5.54 through gift “attrition” as a result of reduced gifts and lapsed donors, for an average net loss of 19 cents, or 1.9 percent.

The results for 2010 represent an increase of 15.8 percentage points from an average net loss of 17.7 percent in 2005.

The median growth rate was 0.8 percent in 2008, 16 percent in 2007, 13.1 percent in 2006 and 18.5 percent in 2005.

Nonprofits in 2010 saw an average net increase of 1.7 percent in the number of donors, compared to an average net loss of 3.2 percent in 2009.

Gifts by new donors grew 21.7 percent in 2010, while giving grew 12.4 percent by “recaptured” donors who had given in the past, then stopped and now have renewed their contributions.

Giving by existing donors grew 19.4 percent.

Giving fell 20.3 percent among donors who gave less, 14.4 percent among new donors who stopped giving, and 21 percent among repeat donors who stopped giving.

Growth-in-giving varies significantly based on the total amount an organization raises, with larger nonprofits performing much better than smaller ones.

The median net gain totaled 8 percent for groups raising $500,000 or more, and 2.3 percent for groups raising $100,000 to $500,000, compared to a median net loss of 12.2 percent for groups raising less than $100,000.

“The economic turbulence battering nonprofits and donors continues,” Elizabeth Boris, director of the Center on Nonprofits and Philanthropy at the Urban Institute, says in a statement. “For nonprofits contending with rising service demands and reduced funding, the challenge is building on the hard-fought gains they’ve made with donors while minimizing their departures.”

Andrew Watt, president and CEO of the Association of Fundraising Professionals, says that, despite the slight improvement in 2010 after two “very disappointing years,” giving rates “still have a long way to go before we reach pre-recession levels, and it all begins with reducing the number of lapsed donors.”

Losing nearly 60 percent of donors ever year and “relying too heavily on new donors” represents “one of the biggest challenges charities face,” he says.

“It’s much less expensive to retain and inspire existing donors than it is to find new donors,” he says, “so charities should focus on stewarding their current donors and reducing losses there.”